168. Memorandum From Robert D. Hormats and Helmut Sonnenfeldt of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger)1

  • SUBJECT
    • Agreement with Canada to Share Oil in Times of Emergency

The memo from State at Tab A2 indicates that, following consultations with all appropriate U.S. agencies, Secretary Rogers has authorized “if the President has no objection” the negotiation and signature of a bilateral emergency oil-sharing agreement with Canada. The Government of Canada has proposed that a U.S. team visit Ottawa March 6 to discuss this agreement, and Peter Flanigan is expected to head the U.S. delegation.

[Page 423]

The memorandum of understanding which has been discussed with Canada and which would constitute an agreement includes the following points:

  • —The United States and Canada shall each endeavor to increase its self-sufficiency in petroleum and petroleum products to the extent practicable and shall take such steps as are deemed appropriate to enhance the security of its supply of petroleum and petroleum products.
  • —If either Government notifies the other that an emergency exists with regard to the supply of petroleum from third countries, representatives of the two governments will meet to confirm the existence of an emergency and to establish means to ensure “effective and equitable sharing between the U.S. and Canada.”
  • —Unless otherwise agreed in these consultations, each government will endeavor to share available imports of petroleum in the same proportion as imports of each from third countries during the year preceding the emergency.
  • —In the event of an emergency, “the Government of Canada shall endeavor to increase, and will not curtail, the pre-emergency levels of the delivery of petroleum and petroleum products to the United States.” The United States in return “shall endeavor to divert petroleum and petroleum products to areas of Eastern Canada in which a shortage of supplies exist.”

Such an agreement is in the interests of the United States, as well as of Canada. It would ensure that supples of Canadian oil to the Mid-West would not be diverted in an emergency to Eastern Canada, which is dependent on imports. It would aid in planning for our future energy needs, and would be helpful in developing contingency plans with other major oil consuming countries. Shultz concurs.

Recommendation

That you have Jeanne Davis inform State that the President has no objection to the proposed negotiations.3

(Note: State has also forwarded (Tab B)4 copy of a memorandum from Armstrong to Simon dealing with Canada’s recent export controls [Page 424]on oil. This is forwarded for your information. We do not believe this Canadian action substantially affects the rationale for approving the above recommendation on emergency oil sharing.)5

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 671, Country Files, Europe, Canada, Vol. IV, Jan 73. Confidential. Sent for urgent action.
  2. Attached but not printed at Tab A is a February 23 memorandum from Eliot to Kissinger.
  3. Kissinger initialed the approval line. A handwritten notation by Scowcroft reads: “Flanigan informed by phone. B.” Attached to another copy of this memorandum is an undated handwritten note from Scowcroft to Kissinger, which reads: “Henry, after you left last night, I told Flanigan his team could leave, because negotiations are scheduled to begin today in Ottawa. My only concern with the proposal is that if the phrase ‘increase its self-sufficiency’ means minimum imports, this could conflict with the conclusions the Energy NSSM may (should) come up with. Brent.” (National Archives, Nixon Presidential Materials, NSC Files, Box 250, Agency Files, National Energy Office, Vol. II, March 73–July 73) Jeanne Davis informed Eliot, March 7, that the President had no objection to the negotiations. (Ibid., RG 59, Central Files 1970–73, PET 1 CAN–US)
  4. Tab B is a memorandum from Armstrong to Simon, March 1, summarized in Document 164.
  5. The minutes of the bilateral meeting, held in Ottawa, March 6, are in the National Archives, RG 429, Records of the Council on International Economic Policy 1971–77, Central File 1972–77, Box 16, 52429 Notes on Ottawa Oil Talks.